Client Story

Company shares passed on through discretionary trust

14th September 2023

Shares in a company can be a valuable asset to pass on – but it’s important that the people you pass shares on to know what to do with them. A client of Partner Laura Banks’ wanted to gift his shares in a valuable private company to his children but also to control what the children did with those shares. Laura advised the client to set up a discretionary trust for the family, with the client being the first named trustee. The trust then received the shares.

This method means the client maintains control over voting in the company – which is especially important as it is a company he generated substantial value in, and still wishes to run while undertaking inheritance tax planning. The client has benefitted his whole family for future generations and the trustees will decide who receives any payments of dividends or if shares are disposed of.

If a child divorces in the future, the shares and therefore the company, will still be protected as the child will not own the shares themselves.

Following this, Laura said: “Discretionary trusts are a good way to pass on shares in a company while retaining overall control. Shareholders can provide for beneficiaries while keeping an eye on what’s important to the business.”

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